From the Yankee Institute for Public Policy, Marc E. Fitch reports on a bill filed by U.S. Representative Rosa DeLauro that would, among other things, make the ABC test the federal standard for classifying workers as employees or independent contractors. Marc writes:
But the bulk of DeLauro’s bill would affect independent contractors by making what is known as the ABC test a matter of federal law.
Proponents of the bill, including DeLauro’s co-sponsors Senators Sherrod Brown, D-OH, and Patty Murray, D-WA, say businesses are trying to avoid paying benefits and payroll deductions like unemployment insurance by structuring their businesses to classify workers as independent contractors rather than as employees.
The ABC test, or variation of it, is currently used by 28 states, including Connecticut, and is much more stringent than the federal government in defining who qualifies as in independent contractor.
Currently, the federal government only uses part A of the ABC test, which defines an individual as an independent contractor “if the payer has the right to control or direct only the result of the work and now what will be done and how it will be done,” according to the Internal Revenue Service.
In Connecticut and other states, however, an independent contractor must also perform the work outside the usual course of the employer’s business and must be “customarily engaged in an independently established trade, occupation, profession or business of the same nature as the service being provided.”
The gig economy, in which individuals classified as independent contractors take job assignments, have fueled debates and pushes for legislation at the state level to classify, for instance, Uber drivers as employees rather than independent contractors.